All the major English clubs have targeted these fans and Chelsea have been particularly active trying to target disillusioned fans of other clubs who are not doing so well. These fans follow success and do switch loyalties.

Indians probably watch more live Premier League matches, including the 3pm Saturday kick-offs, than most do in Britain.

When the Premier League was founded in 1992, La Liga in Spain and Serie A in Italy were the dominant European leagues, secure in their own homelands and in the wider world. Italian football had even invaded England’s football scene, being broadcast every Sunday afternoon on Channel 4. But in the last 20 years all that has changed.

In another curious reversal of the American experience, football embraced segregation in order to cope with fan violence. The Americans spent much of the 1950s and 1960s trying to eliminate segregation based on colour from their society. English football in the 1970s decreed that fans could only watch if there was strict segregation between fans of rival teams. For all the changes that have since occurred in football, this separation of home and away fans still exists, with grounds having large signs directing them away from each other. And even in new stadiums such as the Emirates, Arsenal’s ground, it is made clear even in the executive box areas that fans should not be wearing the colours of the visiting teams.

Against this background, it is hardly surprising that English football failed to attract non-white fans. This failure persisted even throughout the 1990s when English football made strenuous efforts to oppose racism. The most prominent initiative, Let’s Kick Racism Out of Football, was launched jointly by the PFA, the Commission for Racial Equality and the Football Trust, and within a year all but one of the professional league clubs in England and Wales had signed up to its 10-point plan. This effort was supplemented by multiple individual initiatives from clubs, fanzines and community groups. However, in 2001 the FA Premier League’s national fan survey found that only 0.8 per cent of “active top-level fans” were Black British or British Asian. This represented a rise of only 0.1 per cent since the previous survey in 1997, and compared to a total minority ethnic representation of 13 per cent in the UK population. The same survey found that 7 per cent of all Premier League fans had reported witnessing racism against other fans and no fewer than 27 per cent had reported racism displayed against players at matches.

Hilly’s great idea was to take the score and the time and put it on the screen. I remember thinking, “Oh fuck — why have we not thought of that before?” It had never been done. Anywhere in the world. Can you believe it, only 20 years ago when you were watching football, you’d switch on and you didn’t know who was playing, you didn’t know the time, and you didn’t know the score.

The Champions League was born! The new marketing concept was both innovative and commercially adapted to the changing market conditions. Each sponsor would receive exclusivity in its product area, not only in the stadium as was previously done, but also on TV, with commercial airtime spots and programme sponsorship. By linking stadium advertising together with on-air sponsorship, it became almost impossible for non-sponsors to associate with the competition. The three pillars of stadium advertising, commercial airtime, and programme sponsorship generated a “multiplying media effect” that offered new levels of recognition to the sponsors. A “less is more” approach was taken and a maximum of eight international sponsors was decided upon. The sponsor package included four stadium advertising boards, ticket allocations, and identification on TV interview backdrops and in the VIP and press areas. Each of the sponsor ticket holders was also invited to specially arranged hospitality suites before and after the matches.

In the years since 1995 the Bosman ruling has led to other changes in the transfer regulations. It led to transfer windows allowing player transfers only twice in a season, once at the start and once in the middle. But most significantly, it greatly increased player power. The court ruling meant that footballers were now free to move when their contracts expired. And this in turn paved the way for footballers to earn multi-million-pound salaries. Sport could no longer be exempt from EU competition rules and had to be treated like any other business. The net effect was that unless a club arranged a transfer before the player entered the last year of his contract he was free to move at the end of it. This tilted power decisively in favour of players and away from clubs. Now players, particularly high-profile stars, were masters of their own destinies. And as free-agent players they could suddenly demand huge signing-on fees and salaries on the basis that the club they were joining did not have to pay anything in transfer fees. Football clubs were powerless to prevent their best players from leaving at the end of their current deals. Conversely, players under contract could demand bigger, better and longer deals — because the threat of being able to leave for free, especially if they would otherwise command high transfer fees, was something clubs could not ignore.

In his very first season Abramovich spent £111.3 million on transfers. Not only was this more than anyone had ever spent before in English football, but the Russian dramatically changed the terms of trade. He paid the full transfer fee at the timing of signing the player. This broke with the usual convention of fees being spread over a period of time. Cash on the nail proved a lifeline for clubs facing cash-flow problems. Indeed, it was immensely beneficial to clubs such as West Ham who were then under financial strain, as the then club chairman, Terry Brown, acknowledged. Since 2008 and the purchase of Manchester City by Abu Dhabi United Group, Chelsea have been challenged and even overtaken in transfer spending. In 2010–11 the club spent £141 million on players, the third successive season they had spent more than £100 million, double that of Manchester United and comfortably ahead of Chelsea at £91 million.

While the 20 Premier League clubs had an income of £2.3 billion, the remaining 72 clubs in professional football in England between them had an income of under £700 million. Two of them, Port Vale and Portsmouth, are in administration and 13 of the clubs in these three divisions are classified by financial experts as in distress, meaning that they have serious court actions against them, including winding-up petitions and high court writs, or have been issued with striking off notices for late filing of accounts or have county court judgments against them.

I do not really watch Shark Tank, but two recent episodes struck my interest. The first was the episode with Singtrix, which has a connection to my time with RedOctane and Guitar Hero. The other was about Coffee Meets Bagel, the January 9th episode (thanks to Kevin Tung Nguyen for sharing the episode) that you can watch below:

Coffee Meets Bagel (CMB) relates because of my work at FriendsPlus, which we sold pre-launch to Noi.vn, Vietnam’s largest dating service in 2013. Like CMB, FriendsPlus focused on creating a non-meat market dating environment focused on the needs of female users, encouraging offline meets between users who explicitly opted in to each other. Some commentary on the episode and CMB:

The team should have been prepared for questions about user numbers. By deflecting the question multiple times, one wonders if they have given different numbers to different people and thus could not say publicly on television what the current numbers were (they would not want to be shown lying), or if CMB is simply at the bottom of the range given (100-500K users). As Cuban implies, there is a big difference between 100K and 500K users, especially considering that CMB has been around for close to 3 years (more on that below) – it suggests limited market or non-compelling and non-naturally sustainable growth.

The team mentions that CMB was invested in by a Match co-founder. That person is Peng Ong, who I actually know. Tinder is invested in by Match, the firm. CMB launched in April 2012, 5 months before Tinder, but Tinder is estimated to have 50 million users today. The team cites Match’s 800M in revenue as a sign of their own potential. That’s the same logic that says you should automatically advertise on Facebook because it has 1 Billion users. Yes, there is some superficial logic there, but you need to delve a bit deeper.

The Sharks are right in that CMB can easily be copied – look at the popular Noonswoon from Thailand.

CMB’s revenue and users are a bit alarming. I discuss it over the next points.

Last year, CMB generated $87K in revenue. If that is $0.50 per user on average, this would imply 170K users. This is reasonable for this type of product and follows what the team said. I don’t know how long the average user stays with the product. If they actually have more than 170K users, revenue is actually less than $0.50 per user. Remember this $0.50 figure for later.

This year, CMB expects to make $1M USD, but expects to lose $1M, which means costs were $2M USD. Current user acquisition is $0.30 per user.

CMB expects to break even at $10M in revenue next year, from 4M users. They expect to spend 3-4M (let’s assume it’s 4M) in to bring on those new 4M users. That is $1 per user. They expect $2.50 per user in revenue, but did not include CMB’s existing users in that revenue figure. This leads me to believe that CMB user lifetime with the service is not particularly long (1 year or less) or that the number of current users and the revenue generated from them is not significant enough to include. This implies the lower user figure in the given 100-500K user range. Increased user acquisition costs suggests this product does not spread virally, something about it does not compel others to talk about it, or you are trying too hard to bring someone who may not be the right fit for your product. If this is the case, the projected gain in average revenue per user (ARPU) for these kinds of users is also a concern.

How did CMB estimate $2.50 per user per year moving forward? CMB is going to jump from $0.50 to $2.50 (500%) in 1 year? How does adding users generate more money per user? Since the revenue is from digital currency / microtransactions, does having more users make the product more sticky? If so, this implies the business is not sustainable now. If that is true, and focusing on this niche is not sustainable, what does this imply about the value the product is creating for its current users? Does having more users actually mean more date / chat frequency which means I need to buy more microtransactions? Again, this is not a meat market like Tinder in which you go on to browse (consume) through people – for Tinder, you need a ton of users. For CMB, you are getting one match per day carefully selected for you. Are there more types of transactions that CMB will be processing in the future that will generate new forms of revenue?

Let’s compare CMB to a Facebook type of product. Facebook generates more revenue by adding more business models. Example, Facebook could sell different types of ad products, and can charge more money with an increased user base (market power) increasing the efficiency of those ads. It can also take a share of revenue that is generated within the platform (apps, games), or sell emoticons. Thus, more users could lead to more revenue, but you also need to add more models for those users, it’s not automatic. This concerns me about CMB – it currently just sells digital currency.

Why is there such a high burn rate (company spending)? With $2M in expenses, this is over $150K in burn per month. You might want to look at CMB’s jobs page to find out where the money is going: https://coffeemeetsbagel.com/jobs/. From my experience: company trips costs a sh*tload of money. Based on LinkedIn, I found about 15 full-time employees at the company. Let’s say on average, each employee costs the company $100,000 each per year (this is low when you include office space, benefits, etc.). The founders mentioned they each make 100K, which for the Bay Area, is low. Based on CMB’s $1M revenue, and $1M in losses figure, however, the team is suggesting they spend 133K per employee per year, which is possible. (This doesn’t include marketing, which at .30 per user at 170K users, would only be about 50K and can be ignored for now). I know that the Bay Area is a different beast with employee expectations, but in my opinion, startups in need of cash need to learn how to conserve cash better.

CMB will break even at $10M in revenue and 4M+ users. With $4M going in advertising, where does the other $6M go? If you stick to the $133K per employee figure, the company would need to grow to 45 people. Perhaps some people are getting raises. Infrastructure should not be a particularly significant cost yet. I don’t think you can have 45 people in a co-working space either. If the cost goes to $150K per employee, that is still 40 employees. If the team can cut the fancy office, parties, trips and focus on profitability, I expect there is a good amount of fat that can be cut. (One of RedOctane’s first offices was a big warehouse with no air conditioning in Sunnyvale – no frills worked out for them)

I wonder if CMB’s quoted revenues include the 30% share that is given to Google Play and iTunes for microtransactions. Otherwise, there is no cost of goods (COGS).

Why does CMB need to grow to be profitable? This, along with CMB’s slow user growth after nearly 3 years troubles me. I could understand the growth in the sense it’s not a meat market app. It’s for people who want quality, real relevance over gross quantity. But why can’t it be profitable now? This makes me question the revenue model. Is CMB going against its core by going to mass-market advertising? If the app is not for everyone, it should be positioned accordingly. I don’t see how growth rescues them long term.

So what should CMB do? I would consider changing to a premium / subscription model to get revenue from more (higher % of users pay, but less overall users) users at higher rates and focus on that smaller niche audience to reach profitability. Do people pay for love? Yes, as long as it is provides real value. CMB seems to be providing that.

The Mark Cuban $30M offer: I don’t think he is actually making the offer, he is saying “what if”, to which the proper response to a hypothetical is of course no. If you say yes, you have publicly given a limit to what your company is worth (the team has suggested a $10M valuation with $500K for 5%) for no reason. You would never want to create the sense you do not believe in your product to preposterous levels. If it were a legit offer, I believe they should have taken it. 3X valuation is nothing to joke at, as much as the team may claim to look at Match’s $800M in revenue or Tinder’s billions in valuation. The team suggested CMB is a cash hungry business intent on growth. CMB received $2.8M in venture capital last May, which would not cover its marketing budget for this next year. Yet, its is only asking for 500K from Shark Tank. This leads me to believe CMB is mainly on Shark Tank for the PR and don’t want to give up very much equity, has another round coming, or does not intend to go with its stated marketing plan at all – it would not have the money for it. If it needs to grow massively to become profitable, CMB has no other option than to take the buyout offer.

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I write whatever I feel like, and often do so foolishly. Opinions here are always my own unless explicitly mentioned otherwise.
Professionally, I am a startup warrior and I hold a MBA from Kellogg (Northwestern). I live in the San Francisco Bay Area (California).